The overall online market, including travel, payments and retail, in the country could reach $103 billion, the US investment bank said in a report.Sagar Malviya&Writankar Mukherjee | ET Bureau | October 26, 2015, 08:02 IST

The overall online market, including travel, payments and retail, in the country could reach $103 billion, the US investment bank said in a report.MUMBAI|KOLKATA: India’s ecommerce market is expected to breach the $100-billion mark by FY20, triggered by increasing internet usage, discounting and investment by online retailers, Goldman Sachs said, revising its previous estimate.

The overall online market, including travel, payments and retail, in the country could reach $103 billion, the US investment bank said in a report this month. The figure is a 27 per cent jump from the $81 billion it estimated in May. The majority of this upward revision is contributed by the etail segment, which is estimated to reach $69 billion by FY20 compared with $47 billion earlier.

"Higher growth in this space is due to the higher-than-expected internet and smartphone penetration, digital wallet adoption, last-mile logistics investments, continued discounting and better execution," analysts Rishi Jhunjhunwala, Venkat Surapaneni and Piyush Mubayi wrote in the Goldman Sachs report.

So, what’s changed in the past five months?

For one, there’s been a strong push in the key ecosystem enablers for ecommerce growth — Bharti Airtel launched its 4G service in about 300 cities and Reliance Jio Infocomm is set to launch the high-speed data service in the fourth quarter.

Taiwanese electronics maker Foxconn Technology Group announced an investment of $5 billion in India over the next five years, while Uber said it will invest $1 billion in the country in six-nine months to expand and improve operations, according to the report. The Reserve Bank of India issued 11 payment bank licences, which are expected to catalyse the e-payment landscape.

Companies agree. "On one hand, buyers across the country get an unprecedented choice of products and brands and on the other, sellers get an opportunity to grow their businesses by tapping new markets. We are also witnessing the beginning of digital payments revolution in India, which will further accelerate the pace of ecommerce growth," said Rahul Taneja, vice president, category management, at Snapdeal.

Capital inflows in Indian companies accelerated in 2015, with over $7 billion coming in during the first nine months compared with $6 billion in all of 2014.

"In the next few years, India will be the second-biggest market for us (after the US) – there is no doubt," Diego Piacentini, senior vice president for international business at Amazon, told ET earlier this month. The Indian business "was the fastest billion-dollar GMV for us and I believe it will even end up to be the fastest to get to $10 billion."

Some analysts believe comparisons and extrapolations with China, the world’s largest market, need to be tempered. "We believe that faithful extrapolations of the China internet story to India are potentially misplaced. India internet companies will likely need to chart a longer and more tortuous path to profitability than some of their China counterparts, and will likely see much greater consolidation among the raft of players populating a particular category/vertical as considerations for scale, better pricing power and turning in favourable economics build up — this consolidation is either natural or forced," according to a recent JP Morgan report.